Axios Crypto

December 04, 2023
GM! Monday is for remembering how important disagreements are, especially at the SEC.
🚨Situational awareness: Bitcoin had a big weekend, breaking $41,000 at a little past midnight ET, even briefly topping $42,000 — putting the asset where it was before the stablecoin terra usd blew up in May 2022.
Today's newsletter is 1,253 words, a 4½-minute read.
🐝 1 big thing: SEC Commissioner Peirce dissents
Commissioner Hester Peirce at Permissionless II in Austin, Texas. Photo: Thomas Allison/Bloomberg via Getty Images
Commissioner Hester Peirce is held up as industry champion at the SEC for often going toe-to-toe against crypto enemy No. 1, chairman Gary Gensler.
Why it matters: Peirce, or "Crypto Mom" per her nickname, doesn't view herself as pro-crypto, per se. According to her, her core philosophy of how government should work just happens to align with a key industry tenet, Crystal writes.
- "I come from the perspective of being — 'Let's not jump to regulation as our first solution,'" Peirce, a lawyer and free markets advocate, tells Axios in an interview at headquarters in D.C.
- What she's saying: In that way, Peirce's nickname doesn't suit her, she says: "It's kind of funny. I don't care one way or the other, but I do think it's important people don't think of regulators as parental."
Zoom in: Peirce's positions often break from Gensler's in crypto — she published dissenting opinions on LBRY, questioned the merit of enforcement action in the agency's first NFT case, and was early in questioning the SEC's broad rejection of spot bitcoin ETF applications.
Case in point: One big moment she felt compelled to speak out on had nothing to do with crypto — the SEC wants to track "what everyone does at all times," she said, hoovering up financial transaction information to hunt down bad actors, or what is known as the consolidated audit trail.
- "Sort of flips on its head the way things are supposed to work," she says.
- "As a regulator we need information, and I get that, but we don't need to know what you're trading specifically unless we have reason to think you're behind something bad."
Zoom out: "You have to step back and go, 'well, we don't want to be a surveillance state,'" she says.
💭 Crystal's thought bubble: A favorite Peirce moment was when she expressed her dissent via T-shirt on a proposal to expand the definition of "exchange," using the shirt to highlight her point that the rule was so ambiguous it seemed to sweep in everyone and everything.
- "It's gonna be so easy for us to say as regulators, 'Wouldn't it be nice if we could pre-clear the code everyone writes and sign off on that?' But what does that do to a country?" Peirce said of that decision.
Of note: The LBRY decision was "a low moment for the commission," according to Peirce — "Somehow they got selected as being one of the projects we went after and it was heartbreaking to me to see that company shut down effectively."
- She cited the Impact Theory decision as being another important moment — Peirce and Commissioner Mark Uyeda questioned the merit of the enforcement action in that case.
- "A lot of people looking at this are saying: 'Wait a minute, if you took the same theory and applied it in a myriad of other contexts we would have so many things that were securities that this agency would be completely unable to regulate the markets because we'd be regulating chinchillas, Pokémon cards, baseball cards and Beanie Babies.'"
- "And that doesn't make sense," she says.
- "When it comes to crypto, we're treating it differently than we've treated any of these other objects."
What we're watching: When asked whether Peirce's opinions moved the needle of change at the SEC, she says, "I haven't seen it yet. I'm still hopeful."
- How would she know if things are changing: "If we actually acknowledged the lack of regulatory clarity as an institution," she says, adding that another signal would be the agency working with folks in the industry.
What's next: Peirce still plans to leave at the end of her term in 2025 to pursue things like beekeeping. "That's the plan. I haven't made a lot of headway. I don't have bees yet."
🍊2. Charted: Recovery


Bitcoin touched $42,000 this morning. It's holding steady now solidly above $41,000, Brady writes.
Why it matters: We could be looking at the first bitcoin-driven bull market in years.
Be smart: 2021's boom was driven by the mania for non-fungible tokens.
- 2017's boom was driven by the mania to buy into initial coin offerings.
- The last time an all-time high was hit purely by bitcoin enthusiasm was 2013, when BTC broke $1,000 for the first time.
While there will no doubt be all kinds of zaniness in any subsequent boom, now the heart of the matter seems to be anticipation of one or several Bitcoin ETFs getting approved in the U.S., opening the brokerage accounts of the richest country in the world.
- On a more macro level, expectations for Fed rate cuts next year have been driving up commodities. Gold prices have been growing for two months, hitting multiple new highs.
What we're watching: If BTC breaks $46,300, the losses of 2022 will be wiped away.
🥷 3. KyberSwap offers repayment
Illustration: Aïda Amer/Axios
KyberSwap users were hacked for roughly $49 million at the end of November and now the team behind the exchange aggregator is offering to pay victims back, Brady writes.
Why it matters: Decentralized finance (DeFi) projects tend to have hefty treasuries — typically big enough that they can afford to cover at least one big hack.
- Flashback: In April 2022, blockchain gaming startup Axie Infinity refunded the $400 million that users lost.
Details: KyberSwap's offer is to repay victims the dollar value of what they lost at the time of the exploit.
- It has also recovered about $5 million from ancillary exploits since.
- Leadership previously offered the attacker a 10% bounty to return the stolen funds.
Catch up fast: KyberSwap was the victim, across multiple chains, of an exploit of a glitch in the project's code, in what's being called an "infinite money glitch."
The intrigue: KyberSwap had gone through code audits, to no avail. This exploit had to be found with a very fine-toothed comb.
What they're saying: After the attack, the attacker published a letter on chain demanding control of KyberSwap.
- "Under my management, Kyber will undergo a complete makeover. It will no longer be the 7th most popular DEX, but rather, an entirely new cryptographic project," the hacker wrote.
The fact that the existing team is offering to just cover losses seems to suggest that it doesn't plan to take the deal.
The other side: "No other industry on the planet is this entertaining," Nic Carter, an investor, wrote on social media.
⏳ 4. Catch up quick
Illustration: Natalie Peeples/Axios
🇸🇻 El Salvador President Nayib Bukele took a victory lap on BTC gains. (CoinDesk)
📢 Coinbase CEO Brian Armstrong said he hasn't gotten much feedback from the SEC. (Decrypt)
🙊 A judge accused the SEC of presenting "false and misleading" evidence in a crypto case. (Blockworks)
🥊 5. Culture hash: Fight night
Photo illustration: Shoshana Gordon/Axios. Photo: Jared C. Tilton/Getty Images
I'm not usually a UFC guy, but I was hanging out with high school friends on Saturday and they wanted to watch the fights in Austin, Brady writes.
- We went to a Buffalo Wild Wings (also not my normal choice) to see the fisticuffs on ESPN+.
Zoom in: One of the main card fights pitted Beneil Dariush vs. Arman Tsarukyan in the lightweight category.
- What did I notice? Dariush was sporting a Crypto.com shirt.
Zoom out: The exchange also has a $175 million sponsorship of the whole UFC as well, a reported 10-year deal signed in 2021.
Catch up fast: It was a short fight. Tsarukyan snuck in a knee to the face that stunned Dariush and then finished him with a right cross to the temple that was nothing short of epic. Ooph.
The bottom line: I got the "cauliflower wings" with the mango habanero sauce. There were tears, but, unlike Dariush, I ultimately prevailed.
This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.
We will know it's a real bull market when we start seeing film or recording stars with no business talking about finance touting random coins or crypto services again. —C & B.
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Brady Dale covers crypto and blockchain impacts on markets and regulation.



